SPX Technologies (SPXC) is a diversified industrial conglomerate that has established itself as a leading provider of specialized infrastructure solutions across a range of critical industries. With a rich history dating back over a century, the company has evolved into a multi-faceted organization, leveraging its engineering expertise and technological prowess to deliver innovative products and services to customers worldwide.
Founded in 1912 as the Piston Ring Company in Muskegon, Michigan, SPX has undergone a remarkable transformation over the decades. In 1988, the company adopted the name SPX Corporation, reflecting its growing diversification beyond its initial focus. A pivotal moment came in 2015 when SPX spun off its Flow Technology segment, allowing the company to sharpen its strategic vision and concentrate on its core competencies in the HVAC and detection and measurement markets.
In 2022, SPX Technologies implemented a holding company reorganization, becoming the successor registrant to SPX Corporation (Legacy SPX). This restructuring was accompanied by several strategic moves, including the divestiture of three wholly-owned subsidiaries that held asbestos liabilities and certain assets, including related insurance assets, to Canvas Holdco LLC. This Asbestos Portfolio Sale resulted in the removal of all asbestos obligations and liabilities from SPX's consolidated balance sheet, further streamlining the company's operations.
SPX Technologies has also pursued a targeted acquisition strategy to enhance its capabilities and market reach. Notable acquisitions include International Tower Lighting, LLC (ITL) in 2022, TAMCO and ASPEQ Heating Group in 2023, and Ingénia Technologies Inc. in 2024. These strategic additions have bolstered both the HVAC and Detection & Measurement segments, bringing in complementary products, technologies, and expertise.
The company's journey has not been without challenges. SPX has navigated cyclical changes in its end markets, supply chain disruptions, and the wind-down of its power generation-related businesses. This included the completion of the wind-down of its SPX Heat Transfer business in the fourth quarter of 2020, the wind-down of its South African subsidiary, DBT Technologies PTY LTD, in 2021, and the sale of its Transformer Solutions business in the same year.
Today, SPX Technologies operates through two reportable segments: HVAC and Detection & Measurement. The HVAC segment engineers, designs, manufactures, installs, and services a wide array of cooling products, engineered air movement and handling solutions, residential and commercial boilers, and electrical heating and ventilation products. The Detection & Measurement segment, on the other hand, specializes in the design, manufacture, service, and installation of underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, transportation systems, communication technologies, and aids to navigation.
Financial Performance and Resilience
Over the past several years, SPX Technologies has demonstrated remarkable financial resilience and growth. In the fiscal year 2024, the company reported total revenues of $1.98 billion, a 13.9% increase from the previous year. This robust performance was driven by strong organic growth in both the HVAC and Detection & Measurement segments, as well as strategic acquisitions that have expanded the company's product portfolio and market reach.
The company's adjusted EBITDA for the full year 2024 reached $392.7 million, representing a 41.8% increase compared to 2023. This impressive margin expansion was achieved through a combination of operating leverage, favorable product mix, and the successful integration of acquired businesses. SPX Technologies' adjusted earnings per share (EPS) for the full year 2024 stood at $5.58, a 29% increase year-over-year, near the upper end of the company's guidance range of $5.45 to $5.60.
In the most recent quarter (Q4 2024), SPX Technologies reported revenue of $533.7 million, representing a year-over-year growth of 13.7%. This increase was primarily driven by continued strong demand in the HVAC segment, particularly in the cooling product lines, as well as the contribution from the Ingénia acquisition. Net income for the quarter reached $57.1 million.
For the full year 2024, SPX Technologies reported annual net income of $201.8 million, annual operating cash flow of $313.1 million, and annual free cash flow of $247.9 million. The company's strong cash flow generation, with free cash flow conversion of 108% of adjusted net income in 2024, has enabled it to fund strategic investments while maintaining a disciplined capital allocation approach.
Liquidity and Capital Structure
SPX Technologies has maintained a healthy financial position, with a net debt to adjusted EBITDA ratio of 1.0x as of the end of 2024. The company's debt-to-equity ratio stands at 0.44, indicating a conservative capital structure. As of Q4 2024, SPX Technologies had a cash balance of $161.4 million and available borrowing capacity of $909 million under its revolving credit facility.
The company's strong liquidity position is further evidenced by its current ratio of 1.87 and quick ratio of 1.23, indicating a solid ability to meet short-term obligations. This financial flexibility allows SPX Technologies to pursue strategic growth initiatives and weather potential economic uncertainties.
Driving Innovation and Expanding Addressable Markets
Innovation has been a key pillar of SPX Technologies' growth strategy. The company has consistently invested in research and development to introduce new products and solutions that cater to the evolving needs of its customers across various industries.
In the HVAC segment, SPX Technologies has developed a range of sustainability-focused products, including biofuel boilers and heat pump boiler combinations that help customers reduce their carbon footprint. The company has also launched an adiabatic line of cooling products that enables customers to optimize power and water usage for their cooling applications. These innovative offerings have strengthened SPX Technologies' position in the growing market for energy-efficient HVAC solutions.
Within the Detection & Measurement segment, the company has introduced a survey-grade precision locator that helps customers meet exacting requirements for mapping critical utility infrastructure. SPX Technologies has also developed an innovative technology that uses acoustics to detect problematic intersections between different underground utilities, such as gas and water lines, enhancing safety and efficiency for its customers.
The recent acquisition of Kranze Technology Solutions (KTS) further bolsters SPX Technologies' capabilities in the communication technologies space. KTS's advanced digital interoperability and tactical networking solutions complement the company's existing offerings, creating new growth opportunities in government and defense markets.
Segment Performance and Future Outlook
HVAC Segment: In 2024, the HVAC segment reported revenues of $1.36 billion, a 21.6% increase from the previous year. This growth was driven by both organic expansion and the impact of strategic acquisitions such as Ingénia, ASPEQ, and TAMCO. Segment income rose by 38.2% to $323.9 million, benefiting from higher revenues, associated operating leverage, and continuous improvement initiatives, partially offset by increased personnel costs. As of December 31, 2024, the segment had a backlog of $436.8 million, with approximately 88% expected to be recognized as revenue during 2025.
The HVAC segment's product portfolio includes key brands such as Marley, Recold, SGS, Cincinnati Fan, TAMCO, and Ingénia for cooling products, and Berko, Qmark, Fahrenheat, Leading Edge, Patterson-Kelley, Weil-McLain, Williamson-Thermoflo, INDEECO, Heatrex, AccuTherm, Brasch, Spectrum, BannerDay PipeHeating, and Solar Products for heating products.
Detection & Measurement Segment: The Detection & Measurement segment reported revenues of $619.2 million in 2024, a 13.1% increase compared to the previous year. This growth was primarily attributed to foreign currency translation benefits, which offset a minor organic revenue decline. Segment income increased by 15.1% to $136.7 million, driven by increased volume, more favorable project execution, and product mix in the aids to navigation, communication technologies, and transportation businesses, as well as the impact of continuous improvement initiatives. The segment had a backlog of $220.9 million as of December 31, 2024, with approximately 58% expected to be recognized as revenue during 2025.
Key brands in the Detection & Measurement segment include Radiodetection, Pearpoint, Schonstedt, Dielectric, Cues, ULC Robotics, and Sensors Software for underground pipe and cable locators and inspection and rehabilitation equipment; Genfare for transportation systems; TCI, ECS, and KTS for communication technologies; and Flash Technology, ITL, Sabik Marine, Sealite, and Avlite for aids to navigation.
Future Outlook: For the full year 2025, SPX Technologies has provided guidance that reflects continued growth and margin expansion. The company expects:
- Revenue between $2.13 billion and $2.19 billion - Segment income margin between 23% and 24% - Adjusted EBITDA between $460 million and $490 million, representing a margin of approximately 22% and 13% year-over-year growth at the midpoint - Adjusted EPS between $6.00 and $6.25, reflecting approximately 10% growth at the midpoint
For the HVAC segment in 2025, the company anticipates revenue between $1.44 billion and $1.48 billion, with a segment margin between 23.5% and 24.5%. The Detection and Measurement segment is expected to generate revenue between $690 million and $710 million, including the KTS acquisition, with a segment margin between 22% and 23%.
In the first quarter of 2025, SPX Technologies expects modest revenue growth driven by the KTS acquisition and a full quarter of Ingénia, with flat organic revenue and similar margins year-over-year.
Navigating Challenges and Positioning for the Future
Like many industrial companies, SPX Technologies has navigated its share of challenges in recent years, including supply chain disruptions, labor shortages, and inflationary pressures. However, the company's diversified business model, strong operational execution, and proactive risk management strategies have enabled it to weather these headwinds and emerge as a more resilient organization.
Looking ahead, SPX Technologies remains well-positioned to capitalize on the favorable trends in its core markets. The company's HVAC segment is poised to benefit from the growing demand for energy-efficient cooling and heating solutions, driven by the increasing focus on sustainability and the ongoing shift towards data center and healthcare infrastructure investments.
In the Detection & Measurement segment, the company's robust project pipeline, including large-scale transportation and communication technology projects, provides a solid foundation for future growth. Moreover, the integration of KTS is expected to further strengthen SPX Technologies' presence in the attractive government and defense verticals, opening up new avenues for revenue and earnings expansion.
Geographic Presence and Market Trends
While SPX Technologies does not provide detailed geographic breakdowns in its reporting, the company operates in over 15 countries and serves a global customer base. As a small-cap company, the majority of its revenue (approximately 83% in 2024) is generated in the United States. However, the company maintains a presence in key markets across North America, Europe, Asia, and Africa through its various business segments.
The HVAC and detection/measurement markets that SPX Technologies serves have experienced steady growth, with a compound annual growth rate (CAGR) of around 5-7% over the past five years. This growth trend is expected to continue, driven by factors such as urbanization, infrastructure development, and increasing emphasis on energy efficiency and sustainability.
Conclusion
SPX Technologies has firmly established itself as a diversified industrial powerhouse, leveraging its engineering expertise and technological capabilities to serve a wide range of critical industries. The company's resilient financial performance, innovative product pipeline, and strategic acquisitions have positioned it for sustained growth in the years to come.
With a workforce of approximately 4,300 employees and a strong emphasis on innovation, SPX Technologies continues to develop sustainable, energy-efficient HVAC solutions and advanced detection/measurement technologies. The company's recent financial results and forward-looking guidance demonstrate its ability to execute on its strategic priorities and deliver value to shareholders.
As SPX Technologies continues to navigate market dynamics, drive innovation, and capitalize on emerging opportunities across its core business segments, investors can look forward to the company's potential for further growth and value creation. With a robust balance sheet, a disciplined capital allocation approach, and a proven track record of operational excellence, SPX Technologies remains an attractive proposition for investors seeking exposure to the industrial sector.